Sam Morris / Las Vegas Sun
Thursday, March 10, 2011 | 4:37 p.m.
Republican Joe Heck enjoys a unique position in Congress as the representative of the district more plagued by foreclosures than any other in the country.
Today, with that in mind, he adopted a unique position in his party as the only House Republican to vote against a bill to defund a Federal Housing Administration program to assist homeowners with underwater loans.
“I agree that people need a paycheck, not a government check,” he said on the House floor prior to the vote. “But we must help individuals who are trying to do the right thing.”
The FHA program allows existing homeowners with underwater mortgages to convert those mortgages to FHA-backed ones, which are usually offered at a lower interest rate than is available through private lenders, especially in this post-subprime era.
But the program hasn’t been well-utilized. It was created under the authority of the Troubled Asset Relief Program -- also known as the bank bailout bill -- which put $8 billion toward the FHA refinancing deal. The Obama administration estimated it would eventually serve anywhere from 500,000 to 1.5 million homeowners.
To date, though, only about 245 homeowner applications have been submitted, and only about 44 of those have been refinanced -- meaning only about $50 million of that $8 billion pot has been tapped.
“This program is not working for our state,” said Nevada Republican Rep. Dean Heller, who voted to terminate the program. “Many federal programs were created with good intentions, however, we must have the courage to eliminate the programs that do not work.”
But a bad roll-out isn’t a reason to sound the death knell on a program, Heck said, especially in a state that he calls "ground zero for America’s housing crisis," with 390,192 underwater mortgages statewide.
“A failed P.R. job should not be the reason a good program dies,” Heck said. “The FHA refinancing program can be a good program, but it needs more attention, and perhaps reform, so homeowners know it’s an option.”
Nevada’s Democratic representative Shelley Berkley also voted to preserve funding for the FHA refinancing program. But the House succeeded in passing the measure to strip funding from the program by a vote of 256-171, with 18 Democrats -- including many fiscal conservative Blue Dogs -- voting with the Republican majority.
"There’s no question this program needs more work and that it has been slow to get off the ground, but its potential to help homeowners in Las Vegas and other communities through an FHA Short Refinance Option is too great to just terminate this effort overnight," Berkley said. "My hope is that we’ll continue to see an increase in the number of loans that are modified under this program and in the number of lending institutions that participate."